Asset Performance Management (APM)

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Next-Generation Asset Performance Management (APM)

The sheer number of definitions of APM can make it difficult to establish a basis for an effective solution. Today, most definitions of APM focus on physical assets (e.g. maintenance and reliability), overlooking the human asset implications centered on a Competent Workforce, Conduct of Operations, and EH&S/Operational Risk. Leaving out the human component leads to a view of APM as a cost reduction exercise targeting maintenance and operations, rather than an opportunity to improve overall outcomes and positively impact the bottom line.

In the early days of APM, the focus was on improved work management and supporting tactics like criticality, Failure Modes, Effects and Criticality Analysis (FMECA), and Reliability-Centered Maintenance (RCM). With the advent of Industry 4.0, many software companies and analysts are promoting the Industrial Internet of Things (IIoT) and prescriptive analytics. However, emergent, next-generation APM requires not only enough high-quality data to analyze, it requires the right data and data scientists to gain insight and to discern recognizable patterns.

Graph that shows the progression of APM complexity: Manual to Computer Age to APM 3.0 to APM 4.0 to Next-Gen APM 4.0

Figure 1 – OS APM Maturity Model
A 2019 Deloitte survey revealed that less than 5% of companies had achieved an effective APM program. Part of this was due to a narrow view that missed the connection between aspects that focus on EH&S and operations. Companies need to broaden their perspective to embrace a framework focused on a dynamic asset strategy that can be optimized for changing business conditions.

While criticality is the logical starting point, decision making is supported through creating an overall asset strategy. In the past, legacy strategy management systems delivered a tactical outcome that focused on modifying the PM interval through CMMS integration. Today, companies need a comprehensive asset strategy solution that has closed loop business process interoperability leading to effective execution of the supporting integrated processes.

Flowchart that shows the 3 phases of Asset Strategy: Develop, Manage, and Execute

Figure 2 – OS Asset Strategy Management

To get the assets to operate at the desired operational profit margin, companies need to incorporate Conduct of Operations (CoO), along with Operational Risk Management (ORM). Breaking down these organizational silos is key to achieving improved production, while maximizing equipment life and maintaining the privilege to operate. This requires cultural change coupled with effective change management to address the transformation of the organization.

In addition, organizations who largely ignore the need for Cultural Change will not fully realize the potential of their investment in a new APM technology solution along with realigned management systems.

The final strategic ingredient is an Operational Performance Management (OPM) framework. OPM is an emerging framework that leverages prescriptive analytics and AI to develop new insights into threats and performance of assets (e.g. asset health and human assets). This analytical framework allows organizations to set performance targets aligned with the new APM vision. Asset Health Monitoring is a key attribute of an OPM framework, and an integrated Asset Health view provides a real-time feedback of the Asset Strategy effectiveness and efficiency to reach optimum performance.

Screen shot of an Asset Health Dashboard that shows Asset Condition, Location, and Overall Summary

Figure 3 – OS Asset Health Dashboard

Benefits of Next-Generation APM

The benefits of next-generation APM far exceed APM focused solely on maintenance and reliability improvements. Companies need a strategy to deliver a strategic APM outcome. This strategy includes a competent workforce supported by Conduct of Operations, and lead by Operational Risk Management.

And, an interoperable solution focused on delivering a single source of truth will outperform siloed IT systems strung together by systems integration.

APM is a complex topic, but Operational Sustainability, LLC® can help with your most challenging APM questions. We’ll work with you to assess, plan, implement, and measure an asset strategy that delivers on the full promise of next-generation APM.

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